Leases

9 Months Ended

Oct. 04, 2020

Leases [Abstract]

Leases

LEASES

General

The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of October 4, 2020, there were no significant leases that had not commenced as of the end of the third quarter.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to our leases as of October 4, 2020 and December 29, 2019:

	October 4, 2020				December 29, 2019
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In thousands)
Operating lease right-of-use assets	$	99,815			$	107,044
Current portion of operating lease liabilities	$	14,015			$	15,914
Operating lease liabilities	87,276				91,829
Total operating lease liabilities	$	101,291			$	107,743
Property and equipment			$	5,786			$	5,007
Accrued expenses			$	1,415			$	1,489
Other long-term liabilities			2,299				1,673
Total finance lease liabilities			$	3,714			$	3,162

Lease Costs

	Three Months Ended				Nine Months Ended
	October 4, 2020		September 29, 2019		October 4, 2020		September 29, 2019
	(In thousands)
Finance lease cost:
Amortization of right-of-use assets	$	176	$	112	$	811	$	536
Interest on lease liabilities	22		12		56		31
Operating lease cost	6,095		6,023		19,076		17,624
Short-term lease cost	85		363		426		1,509
Variable lease cost	1,089		561		2,659		1,319
Total lease cost	$	7,467	$	7,071	$	23,028	$	21,019

Other Supplemental Information

	Three Months Ended				Nine Months Ended
	October 4, 2020		September 29, 2019		October 4, 2020		September 29, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22	$	12	$	56	$	31
Operating cash flows from operating leases	5,528		5,653		16,978		16,158
Financing cash flows from finance leases	442		291		1,252		808
Right-of-use assets obtained in exchange for new finance lease liabilities	1,156		252		1,709		803
Right-of-use assets obtained in exchange for new operating lease liabilities	1,517		1,437		5,582		7,973

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of October 4, 2020 and December 29, 2019:

	October 4, 2020		December 29, 2019
Weighted-average remaining lease term – finance leases (in years)	3.29		2.76
Weighted-average remaining lease term – operating leases (in years)	10.59		10.60
Weighted-average discount rate – finance leases	2.75	%	2.06	%
Weighted-average discount rate – operating leases	5.96	%	5.86	%

Maturity Analysis

A maturity analysis of lease payments under non-cancellable leases is presented as follows:

Fiscal Year	Operating Leases		Finance Leases
	(In thousands)
2020 (excluding the nine months ended October 4, 2020)	$	5,262	$	411
2021	18,529		1,367
2022	15,126		903
2023	12,464		680
2024	10,513		407
Thereafter	78,668		153
Total future minimum lease payments (undiscounted)	140,562		3,921
Less: Present value discount	(39,271)		(207)
Total lease liability	$	101,291	$	3,714

Policy Elections

The Company made an accounting policy election not to separate lease and non-lease components for all asset classes, except for data center assets, and will account for the lease payments as a single component. The Company also made an accounting policy election to exclude leases with an initial term of 12 months or less from the calculation of the right-of-use asset and lease liability recorded on the consolidated condensed balance sheets. These leases primarily represent month-to-month operating leases for vehicles and office equipment where we were reasonably certain that we would not elect an option to extend the lease.

Leases

LEASES

General

The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of October 4, 2020, there were no significant leases that had not commenced as of the end of the third quarter.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to our leases as of October 4, 2020 and December 29, 2019:

	October 4, 2020				December 29, 2019
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(In thousands)
Operating lease right-of-use assets	$	99,815			$	107,044
Current portion of operating lease liabilities	$	14,015			$	15,914
Operating lease liabilities	87,276				91,829
Total operating lease liabilities	$	101,291			$	107,743
Property and equipment			$	5,786			$	5,007
Accrued expenses			$	1,415			$	1,489
Other long-term liabilities			2,299				1,673
Total finance lease liabilities			$	3,714			$	3,162

Lease Costs

	Three Months Ended				Nine Months Ended
	October 4, 2020		September 29, 2019		October 4, 2020		September 29, 2019
	(In thousands)
Finance lease cost:
Amortization of right-of-use assets	$	176	$	112	$	811	$	536
Interest on lease liabilities	22		12		56		31
Operating lease cost	6,095		6,023		19,076		17,624
Short-term lease cost	85		363		426		1,509
Variable lease cost	1,089		561		2,659		1,319
Total lease cost	$	7,467	$	7,071	$	23,028	$	21,019

Other Supplemental Information

	Three Months Ended				Nine Months Ended
	October 4, 2020		September 29, 2019		October 4, 2020		September 29, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22	$	12	$	56	$	31
Operating cash flows from operating leases	5,528		5,653		16,978		16,158
Financing cash flows from finance leases	442		291		1,252		808
Right-of-use assets obtained in exchange for new finance lease liabilities	1,156		252		1,709		803
Right-of-use assets obtained in exchange for new operating lease liabilities	1,517		1,437		5,582		7,973

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of October 4, 2020 and December 29, 2019:

	October 4, 2020		December 29, 2019
Weighted-average remaining lease term – finance leases (in years)	3.29		2.76
Weighted-average remaining lease term – operating leases (in years)	10.59		10.60
Weighted-average discount rate – finance leases	2.75	%	2.06	%
Weighted-average discount rate – operating leases	5.96	%	5.86	%

Maturity Analysis

A maturity analysis of lease payments under non-cancellable leases is presented as follows:

Fiscal Year	Operating Leases		Finance Leases
	(In thousands)
2020 (excluding the nine months ended October 4, 2020)	$	5,262	$	411
2021	18,529		1,367
2022	15,126		903
2023	12,464		680
2024	10,513		407
Thereafter	78,668		153
Total future minimum lease payments (undiscounted)	140,562		3,921
Less: Present value discount	(39,271)		(207)
Total lease liability	$	101,291	$	3,714

Policy Elections

The Company made an accounting policy election not to separate lease and non-lease components for all asset classes, except for data center assets, and will account for the lease payments as a single component. The Company also made an accounting policy election to exclude leases with an initial term of 12 months or less from the calculation of the right-of-use asset and lease liability recorded on the consolidated condensed balance sheets. These leases primarily represent month-to-month operating leases for vehicles and office equipment where we were reasonably certain that we would not elect an option to extend the lease.